China to raise defense budget, eyes Taiwan

Agencies, Beijing

China is to boost its military budget this year by 12.6 percent, a parliament spokesman said on Friday, as delegates began gathering in Beijing to debate an anti-secession bill aimed at self-ruled Taiwan.

Tens of thousands of police and other security personnel took up position in the capital, ready to crush any display of dissent during the annual National People's Congress (NPC) session opening on Saturday.

The NPC is widely viewed as a rubber stamp -- legislation is drafted well in advance and approved with near unanimity -- but the anti-secession bill has given the session a strategic edge.

Beijing has boosted defense spending steadily in the past 15 years to transform the military into a high-tech force with the muscle to back its threat to attack heavily armed Taiwan.

But parliament spokesman Jiang Enzhu played down suggestions that this year's military budget increase to 247.7 billion yuan (US$29.9 billion) was aimed at Taiwan.

He said the money would go to boost soldiers' pay, to a military social security fund, and to restructure, train and modernize the 2.3-million-strong People's Liberation Army.

He added that China would demobilize 200,000 soldiers this year. He appeared to be referring to a previously announced reduction in the armed forces strength from 2.5 million to 2.3 million.

"China's national defense budget is at a relatively low level compared with other major powers in the world," Jiang said.

In his report to the NPC on Saturday, Finance Minister Jin Renqing is set to predict overall state spending of 3.23 trillion yuan this year, up 13.7 percent on 2004, according to sources who have seen the draft budget. This would trim China's budget deficit by six percent to 300 billion yuan.

Jin would also outline plans this year to issue 80 billion yuan in special bonds to be used mainly for infrastructure projects, down from the 110 billion budgeted for 2004.

The political future of Hong Kong Chief Executive Tung Chee- hwa, who sources say has asked to resign, will also be in the spotlight.

Delegates were to review the request of former president Jiang Zemin to resign as chairman of the State Central Military Commission, the spokesman said.

Analysts say the resignation will be accepted and Hu will be elected to the largely ceremonial post.

Other agenda items to be discussed include the safety of the country's coalmines and the growing income gap between rural and urban residents.

Officials were taking every measure to ensure that the 10 days of meetings taking place in Beijing's cavernous Great Hall of the People went off without disruption.

Cars entering the capital on a sunny but cold and blustery day were being searched, with new security measures including a city ban on hot air balloons, model aircraft and paragliders.

State television showed bomb-sniffing dogs on patrol in Tiananmen Square and around the Great Hall. It showed kitchen staff washing vegetables to make sure the 3,000-odd delegates eat only the cleanest food.

Clusters of police, some in helmets, stood at street corners around the square, in front of the huge portrait of late Chairman Mao Zedong on the Tiananmen gate, and at entrances to the subway. Busloads more stood ready to quash any disturbance.

Some stopped passers-by, checking identity papers.

The square itself was briefly cordoned off, although the usual throng of tourists were clicking their cameras at the Forbidden City.